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tv   Closing Bell With Maria Bartiromo  CNBC  January 6, 2010 4:00pm-5:00pm EST

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and welcome back to the floor of the new york stock exchange. it's time now for the closing countdown. it looks like the major averages will be flat for the most part on this day. nasdaq under a little bifts pressure. some the online retail names given a little bit back today so the nasdaq looks as though it will close into negative territory. a lot for the markets to digest today. you had the adm employment report with a bit disappointing. the nonmanufacturing report and so is the service sector continues on its rebound and the fed minutes sewing a little bit of descension behind those closed doors about quantitative easing. it sets the stage big time, perhaps more so for friday's employment report. big news today out of tech space, you've got at&t planning to come without a number of smartphones running google's operating system. hp and microsoft getting together for a tablet. all of this on the heels of what we heard yesterday from google.
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there's the bell and mandy drury will pick you up at the top of the hour. [ closing bell ringing ] that's the bell so it must be 4:00 p.m. on wall street. do you know where your money is? welcome to the "closing bell," everybody. i'm mandy drury standing in for maria bartiromo. wall street locked in a real tug-of-war to the close today as a rally in energy was offset by some weaker than expected labor data. treasuries moving following a release of the minutes from the fed's latest meeting. well here is a look at how we finished the day on wall street, it was really flat with the dow and the s&p only slightly squeaking to the upside of the line. the nasdaq stuck below it by 0.3% of 1%. we've got a team who is covering today's top stories. out to them, steve liesman, kick it off for us. >> thanks, mandy. will jobs be positive on friday? we've got a bunch of economic data. we will join the debate. it looks like a lot of what is happening in the market right
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now with economists on both sides of the zero line for friday. >> i'm jane wells in sacramento. governor arnold schwarzenegger talks about the, quote sophie's choice he's having to make to save california financially and why is he so angry about the health care proposal in congress? find out. >> reporter: and i'm scott cohn at cnbc global headquarters. here across the country things are not a whole lot better, not just here across the country, but clear across the country. we'll talk about state finances nationwide. they're not good. mandy? >> okay, let's do a bit of a roundup now and get more on today's action. mary thompson has her eye on the floor of the new york stock exchange. >> as you mentioned at the top, really it was a mixed session. what we saw today were a lot of gains in the commodity stocks as they were very, very strong. number of reasons for that, we had gold at a three-week high. oil at its highest levels since october and copper at a 16-month high. fed minutes, some suggesting that some expectations that there could be adarded stimulus if fed members think that the economy will weaken some more. i know that steve liesman will
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have more on this. the data was mixed. but people also waiting the retail sales number. one thing that traders will be focusing on. as mentioned, materials and energy that were basically the gainers today. slight gains for the broader market as well as the dow. the laggers again were tech and telecom. steel was particularly as strong. worthington industries come out with some better than expected along out with goldman sachs making positive comments on the steel sector saying demand for steel should continue well into 2010. so a.k. steel, along with worthingston and u.s. steel showing some nice gains today. a different story for the airlines. couple of factors at play here. we had oil, of course, moved above $83 a barrel and also u.s. air came out with its load factor numbers, and basically u.s. air so far has been the only one to announce a decline in its load factors, which are the number of seats that are filled. amr's load factor actually increased and continental and ual reported increases there yesterday which actually triggered a gains in airline
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stocks yesterday. a reversal today on the higher oil prices on the news out of u.s. air. u.s. air's hurt because primarily domestic airlines, the rest of them have international exposure. home builder announced a share offering of 18 million shares of its stock. it was off 11% on that news. and family dollar was a winner after the low price retailer came out with better than expected numbers for the fiscal first quarter and also raised its outlook for this second quarter. take a look at that, its stock up a very healthy 12%. give you a late-day check of what happened with cadbury as headlines started to cross across the "the wall street journal" saying cadbury and hershey holding basically backchannel talks on a possible rival bid to kraft. the dow finishing up with a modest gain of just about two points today. again, a mixed session. and end, mandy, i was talking to
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art cashin before the end and he said $83 to $83.25 is an area of resistance for oil. he says you see the dollar weaken, spike yesterday he says you could see fireworks. >> something to certainly keep in mind. and said, we don't need to worry about them and they just roared higher anyway. >> reporter: that's right ten straight days. >> yeah. more analysis of what is going on with our oil prices. cnbc's sharon epperson has been following that. >> reporter: hi, mander. it's all about fresh money really fuelling this rally that we've seen in oil prices. yes, the weak dollar may have had something to do with it. earlier, a few months ago, that dollar/oil correlation is broken down in large part and what we're seeing a lot of new money sitting on the sidelines coming into this market and that is really being put to work in oil, energy and commodities across the board. it was the tenth straight day of gains today for the crude oil market and the fact that the close today was the highest that we've seen since october of 2008. keep in mind as we look at a new fresh contract high for the
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february contract today above $83.50. the next real resistance level is $85 a barrel and after that not much to stop it from $90. we could see higher prices. nothing to do with the fundamental data. the data from the energy department quite bearish and increase in crude and in gasoline supply, distillate demand. below it was a year ago. despite the cold temperatures. seeing fundamental data coming to play is the natural gas market. the cold weather that we're having is having impact on the warheads, through the pipelines, causing them to freeze. that could have an impact on the storage. releasing a report of about 151 to 161 of bcf according to analysts. watch 10:30 a.m. take a look at what has happened to gold prices, the weak dollar there perhaps playing a role there with gold up for the past four sessions and it's nearly a
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$40 rise in these past four days with gold prices and silver even outpacing those gains. copper up as well. very strong are if the metals today as well. back to you, mandy. >> money to be made in commodity, right? >> reporter: absolutely. >> thanks for that sharon epperson. today's business headlines. supply management services index rising 1.4 points in december to a rating of 50.1. now overturned to expansion after november's contraction the reading was still weaker than what wall street was forecasting. all ahead of friday's all-important the mother of all data indeed the employment report, adp employer service says the private sector shared 84,000 jobs last months. slightly better than expected though and does mark the smallest decline since march of 2008. meantime, challenger, gray & christmas reports planned to cut jobs. fell to the lowest level in two years. and cnbc has confirmed the justice department will lead an
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antitrust review of comcast to require a stake in nbc university from general electric and the s.e.c. will review the deal and congress is expected to hold hearings on the acquisition next month. senate banking committee chairman chris dodd says he will not seek re-election in november after 30 years in the senate. dodd was expected to have a tough time winning a sixth term because of his role in protecting bonus at aig and for allegedly getting a mortgage from countrywide financial. on top of that all of that we have the minutes from the fed's latest meeting which signals that the fed should consider extending its asset purchases of hings like mortgage-backed securities. there was some concern among some members of the fomc that the economic recovery was in danger of the absence of government support. so what does it all mean for investors? let's dig a little bit deep into all of this. we've got robert at research affiliates chairman and peter klein, portfolio manager at fifth third asset management. thanks very much for your time today. one of the key takeaways they got from the fomc minutes is
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they said that output and employment gains and growth were going to be slower than what we've seen in previous recoveries. and peter, i believe that echoes your sentiment as well that overall this economic recovery that we're seeing here in the u.s. will lag in what we've seen in historic recessions. >> mandy, you're right. history shows that coming out of these steep recessions, we get a very large growth spurt and i think this time around we're going to have very moderate, maybe 2 to 4%, sort of growth scenario which is a lot slower than what many would expect coming out of a deep recession that we just had. >> robert, what do you think about the growth story and what the fomc said and what does it mean for the market? >> you know i think it's awfully interesting that the issue tends to be framed in terms of what level of growth to expect in the coming 12 to 18 months. i think there's been comparatively little focus on the risk of that "w"-type
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recession. what happens when the fed does stop its quantitative easing? what happens when the fed begins to rein in some of the immense flood of liquidity that has fueled this mother of all recoveries? >> but you would assume, robert, that they're not going to actually start doing that in any meaningful way until they do see that perhaps the economic recovery and perhaps private jobs growth and small businesses and all of the areas that have vulnerabilities, until they feel that they're on a sustainable growth path, wouldn't you say? >> well, that would be the normal waive thinking about it, but the fed doesn't have singular and seoole control ove of this. if the market's appetite of vast flood of incremental depth st t starts to participate. it cannot make these decisions unilaterally. there has to be demand for
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bonds. there has to be a sensible cost for the added debt. so what we have is the fed in effect borrowing from future taxpayers to push money into the current economy and at some point that must stop. >> okay, unfortunately i have to leave it there, guys, but thanks for your time. i've got breaking news coming out of the chicago. phil lebeau is on the job. >> reporter: mandy, just wrapped up the gm conference qual chairman/ceo ed whitaker jr. first of all, he believes that general motors should be profitable in 2010. there are some obstacles and hurdles they need to overcome but he's optimistic that'll happen this year. ipo not likely to happen until late this year, if it does happen. it could happen next year. and finally there could be hundreds of gm dealers reinstated as part of the arbitration process and ed whitaker saying on the conference call, listen the selection of who is going and who is staying that is all part of the bankruptcy process. it's a bit arbitrary but they believe there could be hundreds of gm dealers reinstated once they go through this process.
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mandy, that's the latest on the conference call. >> yeah, indeed, some very significant move there in regards to the dealers. thanks a lot, phil. will friday's employment report show signs of the labor market? i.e., get a positive report finally? we'll bring you some answers on that in just a moment's time. a new push by another world leader to dump the dollar as the world's reserve currency, which one? in this unusually volatile time,
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well, are there always many questions out there in the markets, but there is one key dwhe week -- will friday's employment report turn jobs growth for the first time in over two years, a sign the economic recovery is really taking hold? cnbc's senior economics reporter, steve liesman has been out slufing and look for cluse. hi, steve. >> reporter: hi, mandy, thanks. overall the employment data that we got today showed
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across-the-board improvement but if the criteria's the that mandy laid out, adding jobs and then the picture is more mixed. the ism manufacturing index, n nonmanufacturing, the services, it went up. growth in the services sector and look inside of it and look at services component -- i am sorry -- the component, it improved the seconds straight month but at 44 it still shows that we're losing service sector jobs. only 2 of 14 surveyed reported job gains. onto the adp number that we got this morning, total private was down 84,000. november was resized a little bit better. getting better each month but still negative. the nonfarm rolls. minus 10,000. this number, though, was the best number since march of 2008. look at it by industry, goods producing still losing jobs. service sector up 12,000. that's the largest gain since january of '08. manufacturing down 43,000. it was also the best small business number we had since july of '08 but still negative.
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let's go onto challenger. the declines earlier -- reported this morning from challenger, gray & christmas. job losses 45,000, down 73%. going the right way. fifth consecutive decline up 5.3% for 2009 though. still about 1.3 million job losses on the month. you can see here, the second half was down 56% from the first half. add improvements in the employment component of the important nationalufacturing survey the ism, better jobless claims numbers and positive revisions, add it all up, it's a chance for job growth in the friday's report. >> a chance. i wonder when percentage that chance might be? steve, don't go anywhere. you're not off of the hook yet because we'll take another look at the state of the labor market and what jobs are coming back and what degree in 2010. brian leavitt economy wist oppenheimer funds. and lin bloom, managing director at westwood capital. brian, to you first of all, the
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adp, what do you think it will mean for the payrolls later this week. >> the adp data has been lagging a little bit and certainly what we've seen from the bureau labor of statistics has been a steady improvement over the past couple of -- over the past number of months. i suspect that what you see is a job picture that's essentially flat or even slightly positive which is a marked improvement from where we were in the beginning of 2009. and certainly a step in the right direction. and a lot of the major indicatorses for long-term job growth, whether it's temporary improvement, average work week, picking up, this is a good sign. >> it might be a good sign. i'm wondering how much may be a bit of smoke and mirror, lin. a lot of people who think if you really want to know what unemployment is like you shouldn't be looking at the payroll number, the u6. >> u6 is 7.12%. very important information in
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it. u6 is employment that includes people who are part-time workers but really want to work full-time. it includes people who have just been out of work for so long that they've stopped working. and you know other underemployed factors. so you know what u6 is telling us right now at 17.2%, is that more than 1 in 6 americans wants to work more is underemployed. now compare to to the great depression with unemployment was 24%. given that we have a much larger government sector making up employment, it's a horrible, horrible number. and we are going to see some improvement from these numbers -- >> can i just quickly -- >> running out of people to fire. >> i just want to question the little analogy that was made there. the 25% unemployment rate in the depression compares with the 10% unemployment rate now. not the 17% u6 number. i want to be clear about that.
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>> oh no, way that the numbers have been calculated over the number of years has changed for political reasons and unemployment tends to be understated because there is this cutoff when people have been unemployed for a certain period of time. we've had women joining the workforce. we have people working later -- >> can i just jump in. >> retirement. >> steve, you don't think a big argument to look at the u6? >> i think that data does it what you want it to into. what's the point of looking at u6. if you are trying to figure out whether or not the job market is improving and then the u6 is improved as well. does it tell us we still have a massive jobs problem in this country tal take years to unwind and get better? yes, it absolutely does. i'm just making the point that you know i don't think 25% to 17% is the right comparison. i would have to look at and where the employment numbers differ whether or not, if it was understated back then. my point is that the numbers have improved.
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they're still negative a chance it becomes positive and the question it comes from an investment standpoint be if it is mildly positive, do you take a flyer on the things that are going? that seems to be the trend in the last several months. >> sorry, i have to jump in. we're going to break down the dollar's recent moves as well and how it is impacting portfolios so do not go away. get out to matt nesto for the break news. >> reporter: you gave me a little heart attack there. 58 cents versus a 43 estimate. the sales up almost 11%. the comparable sales, the blowout number, 7.3% increase. consensus was about a 2.47 increase. take a look at their forecast going forward they see their fiscal fourth quarter 67 to 71 cents a share versus the 72 estimate. so again pretty strong. again, a big company, folks. $10.3 billion market cap. it's in the s&p 500. the nasdaq 100, the morgan
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stanley retail index, the russell 100. by market cap it is bigger than sears, it's bigger than nordstrom's, it's bigger than macy's and now it is 6% bigger than it was after 1.5% move today. so the big number 58 cents a share versus a 43 estimate. another retailer with another big quarter. i don't know if this is a trend but it certainly looks like it right. >> you matt, thanks very much for it. consumer electronics are proving to be a hit this season. i certainly got some in my stocking and the next generation of gadgets are about to be unveiled at the consumer electronics show in vegas. which companies are shaping up to be the biggest winners?
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4:24 p.m. here in new york city. very early in the morning down under. the governors of two states with huge economies and huge budget problems delivering their state addresses today. jane wells is in sacramento, california, covering the golden state. but we do start with senior
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correspondents scott cohn and cnbc's headquarters on the big problems that are facing new york city. >> reporter: new york across river from here and california across the country get the attention because they are the two largest economies, but make no mistake, these issues are coming to a statehouse near you. chances are they're probably there already. new york state, home to wall street and the financial meltdown facing a $3.2 billion budget deficit this year. why governor david paterson in his annual state of the message in albany warned of an impending disaster. >> we have to take firm and decisive steps to rebuild new york. we need fiscal reform. we need ethics reform. and we need an economic plan that will put new yorkers back to work. >> reporter: to close the gap paterson has already proposed some wrenching budget cuts including cutting state agency budgets by 10%, that saves half a billion dollars, and also
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proposing to cut $1.3 billion in local assistance, $686 million or 3% of theadecation budget and nearly half a billion from health care. he says there is just no choice and also talking about spending capancy ethics reforms. the national conference of state legislatures says as of last month 35 states and puerto rico face budget gaps this year. $28 billion and counting and most states don't end their fiscal years until june. on a percentage basis, new york and california are far from the worst. that honor goes to nevada and arizona, which are looking at projected gaps for 2011 of around 30%. but big stakes mean big dollars and nowhere bigger than california which is why where we find our jane wells. jane? >> reporter: scott, with a $6 billion deficit this year and a projected $14 billion next year, governor schwarzenegger said today that he has to make a, quote, sophie's choice, choose which programs to cut or even kill, quote we have no choice. but he also says the worst is over for california.
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he has proposed a series of initiatives to jump-start the economy here, a half billion in spending to retrain and create jobs, tax break for home buyers, in green technology and prison spending at $50,000 a year per prisoner in california, he suggests that privatizing prisons could save the states billions. the response from lawmakers is mixed. but on one issue they seem to agree with him, his criticism of the new health care bill in congress is, quote, a trough of sweetheart deals which will help other states but cost this state billions. >> california's congressional delegation should either vote against this bill that is a disaster for california or get in there and fight for the same sweetheart deal that the senator for nebraska got for the cornhusker state because that senator for the cornhusker state got the corn and we got husk. >> how is california doing? well, controller john chung says revenues are finally the last couple of months meeting
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expectations but it is not enough to fill the gap. >> if they do not fix this as they did not last year, we will be in cash crisis this summer. >> reporter: it could mean more ious and the governor hopes that he can get more money from the federal government. every $1 california gives back to d.c. mandy, he said, quote, we're not look for a federal bailout, but federal fairness. back to you. >> thanks very much, jane wells with that report. well, still ahead a look our after-the-be after-the-bell's earners.
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the consumer electronics show in las vegas does not kick off until tomorrow but already a whole lot of buzz coming out of the tech sector. cnbc's silicon valley bureau chief jim goldman is in sin city
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with the latest. and probably checking out the gadgets more than the sins i would hope, jim? >> reporter: indeed. you know a lot of fun stuff but get to some headlines, first. because there is news being generated out of this show, even though, as you said, it really hasn't begun yet. let's begin with the hp/microsoft news that should break tonight. we've now confirmed that, indeed, microsoft and hp will be unveiling a brand-new tablet computer this evening. and again, the reason this is news here, remember we're just two weeks away from apple releasing its own version of a tablet computer. again, i've also confirmed that. that will be a january 27th event. i'm hearing price ranges anywhere from $799 to $1,099 depending upon configuration but microsoft steve ballmer will do what he can tonight with hp to steal a little bit of that thunder. device should be available sometime midspring and hp releasing earlier today some new touch screen netbooks, some of that same technology likely will
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be included in tonight's event. let's move on now, because at&t's also making some news, announcing that they will release five new android phones from the likes of motorola, htc, and others. dell, one of the key players in all of that. dell finally unveiling its u.s. smartphone strategy but at the same time at&t makes more significant news by announcing that it will support the web o.s. operating system from palm and as well as release two handsets from palm as well. a huge win for palm. keep an eye on this stock. one to watch. see there, reacting nicely, up 6% on that news. and check this out, if you haven't seen 3d tv you will see lots of it that the show, but this particular 3d tv is one that you will want to pay close attention to it. abouts it which samsung, 52 inches. this is 3d t tv, but you don't need glasses. there is samsung and they'll be
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showcasing this technology. it doesn't translate too well here on our televisions because it's only two dimensions but believe me when i tell you when you see what in does without those pesky glasses it is going to knock your socks off. so that's just some of the examples here and there's also some you know little technology. this is the pocket radar. it is a little mobile device. it's a speed gun. you've seen police use these things. shooting at cars. now you've got this kind of technology in the palm of your hand. it's all magic under the hood, if you will, pocket radar, $249 and this will be available shortly. if you've got a little picture, a little league picture in the family something that you'll want to take to practice to track how he pitches. very cool stuff. some the technology and we'll have complete coverage for you and as well as what happens tonight with microsoft and hp. >> i still believe, jim, that you have one of the best jobs at cnbc. thanks for all of that. >> reporter: super fun. for investors the consumer electronics show is all about tradable trends in tech, which have been closely watched by my
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next guest. mike bramski, managing director at rbc capital markets and david garrity. david, let me get to you first of all. we've been talking about smartphone, tablets, 3d tv. what do you think is the most important trend regards to investors? >> i think that the important trend for investors to focus on here is the fact that with regard to smartphones, they now represent about 20% of the cell phone units sold world wide. we're getting to a point where we are reaching almost a tipping point, if you will, in terms of mobility. that is, consumers having access to broadband internet in a wireless form tactor. in that standpoint we think that's a meaningful point in differentiati differentiation. we think that consumers will start to say, look if i am spending money on a product this time it needs to have mobility embedded in it. plays out well not only for smart phones but the smarthooks with the introduction of hewlett-packard and apple's coming later this month. now mobility and this type of
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feature obviously is going to make look what's already installed out there in terms of desktops and also in terms of laptops. look rather obsolete so this should be creating pent-up deman. it's support continued performance in the tech sector that we enjoyed in 2009. >> right if you have a consumer who perhaps doesn't have as much money as used to or like to be more careful, he'd rather have a gadget that's got everything in it. mike, do you think that the consumer, on average, is going to return to buying gadgnets any meaningful way in year? >> i think that certainly from the initial way that the year has started, it looks like selectively, certain sectors like smartphones as we've mentioned but also like other new categories like tabbooks with e-book readers will be popular. i call it selective indulgence. in other words, while perhaps the recession is clearly creating an overhang in many dimension to the economy, people are still spending money on the things that they really get pleasure out of that are cool,
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innovative and we're certainly seeing that in terms of apple momentum. we're seeing that in terms of the google android momentum. other products out there. and we're seeing it online. >> david, what are your stock picks in light of what trends are out there. >> in terms of the wireless sector we think that some the chip manufacturers such as national semiconductor is of interest here and to the extent of more wireless access is on tap. clearly google is significant beneficiary of that. so also at the same time from an infrastructure standpoint, obviously a lot of wireless applications of data intensive, which works to the benefit of cisco. so from that standpoint, two large cap names and one smaller cap name that are both well positioned relative to these trends. and also say intel, obviously, question mark here as well positioned to benefit wireless. intel may decide to make acquisitions to grow business in this area. >> what kind of acquisitions. >> you may see a bid from intel for the likes of national semi. that would not rule it out and you have seen consolidation
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unfolding in the tech sect nora number of different areas. >> mike, what are your stock picks in the tech world. >> we like apple still. we continuing is well positioned for trends, all the trends that you've been talking about and it is still compelling take out cash at 23 times forward earnings. a lot to run. the iphone is a great franchise and potential upside from the tablet coming. more controversial names, we like research in motion. we think that that's a 13 times, a great idea this year. we think that this year, they'll show that they're going to be back in the game with improved user interface and other applications that people have been sort of criticizing them for. and we also like palm. palm at the show unveiled some deals and we think that -- >> mike and david -- >> smaller name is doing well. >> sorry to jump in on you. we've got breaking news. what's the latest on cadbury and kraft. >> reporter: a little soap opera, right? hershey is coming out earlier today. "the wall street journal" reporting that they're holding backchannel talks. cadbury encouraging hershey to
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quietly consider an offer, and now a statement from cadbury following those headlines. "not looking for a white knight and we remain focused on demonstrating the value and potential of cadbury as the world's greatest confectioner." we are consistently on delivering value to shareholders and unless and until we have a credible offer that adequately reflects the strength of this business, there is nothing to comment on. you can see cadbury shares a little change in the after hours there. the intraday chart will show pretty much of a steady run. hershey's still quietly mullying a bit to go forward. $16.5 billion is on the table as the last offer from kraft. now largely stock, but also with some cash mixed in. you could see the hershey weakening in the after markets. so the market voting on the probability that maybe hershey may be take a big bite out of the british confectioner. >> white knight is the name of a candy bar. don't know if you have it here.
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>> is it good? >> it's very good. >> all candy bars are good. thanks, matt. the dollar has been rebounding lately but it is still sharply over the past year. find out if the greenback can continue its comeback? 't use fe. better cross your fingers. [ man ] oh, yeah, the accident. well, you better knock on wood. remember, we did a green renovation in here, there's no wood. but russ bought a rabbit's foot. it's a bear claw. you could throw salt over your shoulder. actually, that's a salt substitute. but you should find dan -- i think he's a leprechaun. what is it about me that says leprechaun? can someone tell me please, someone? you should have used fedex. [ male announcer ] we understand. you need reliable overnight shipping. fedex. boss: hey, those gecko ringtones you put on our website people love 'em! gecko: yeah, thank you sir. turned out nice. boss: got another one for you. anncr: at geico.com, it's easy to get a free rate quote, manage your policy, make payments or even file a claim! boss: now that's a ringtone. gecko: uh yeah...it's interesting.... certainly not the worst ringtone i've ever heard...
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french president nikolas sarkozy. he said would push for a new monetary acquisition. but is there really an alternative for world leaders who want to dump the dollar? let's get our thoughts now from allan rossum. from the world bank of scotland. and also former assistant secretary of the treasurer for international affairs. that's quite a title. thank you for much for joining us today. fred, this has always been the beef, lots of people, china, brazil, russia, many countries have been asking for some alternative but they really just cannot find one that's viable. >> first of all, the dollar is not weak. the dollar strengthened enormously all in 2008 due to risk aversion at the height of the crisis when people were running into the dollar into treasuries.
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dollar went up 15% in 20078, it's now come down about the same amount. the dollar's right about where it was at the start of the crisis two years ago. moreover, the united states is still running very large trade deficits. if anything the dollar is still a bit overvalued with respect to the euro and the other key currencies. so it's simply fatuous on the part of sarkozy and others to say the dollar is weak. if there is any disequilibrium. and the chinese, themselves too weak and the dollar itself overvalued. >> would ahgree with that, that the dollar is overvalued against some of the currencies just mentioned? >> yeah i would agree actually with what fred said in terms of characterizing the dollar in general. looking overvalued in relation to the likes of the chinese renminbi. some other european currencies.
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it's not a huge surprise of course to see the likes of french politicians talking about the dollar being too weak. this is really nothing new. there's a perception that mercantilist policies are sometimes pursued in the u.s. but as fred rightly points out, the -- u.s. are not exactly great. that would in fact justify a weak dollar. >> indeed. a weak dollar is one thing so long as it is an orderly weakness, if you get what i mean. an orderly decline. any dangers the external position that the united states is that we could see a collapse in the dollar, fred. >> well, it's always a risk and officials always have to worry about it. but remember the dollar went down by about 25% from early 2002 through the early part of 2008. that was a very orderly, gradual
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decline. it took place over five years. there was no disruption to markets. there was no upward pressure on u.s. interest rates. there was really no interruption to a world economic boom all through that period. so the more likely course of any further dollar correction, particularly against the asian currencies, which is where the big disequilibrium now that is likely to be gradual only because the asians particularly the chinese will enter to make sure that it is gradual. i don't think that there is any real risk of a big dollar collapse. would it only occur if the u.s. economy really went bad, if u.s. economic policy and particularly the fed's policy really went bad and i don't think those are likely at all. >> yeah, i think that you raise a good point. and alan, wondering if the chinese always banging on about about they would prefer another currency as the global reserve is really just moot point when you consider if the dollar did collapse, if dumped as a reserve currency, what about all of their trillions of dollars in u.s. treasury holdings?
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>> yes. no, they in some ways own the bank and really can't sell it so i think the chinese have exactly that kind of predicament. i cannot see how it is in their interest to see the dollar weaken substantially, again, like fred said, a good reason that the chinese will be there intervening very aggressively, if neebd, if the dollar is on a slippery slide. >> do you think, alan -- sorry go ahead, fred. >> it's even worse than that for the chinese because if the dollar drops sharply, their currency would rise sharply. that would hurt their competitive position. would it bring down their trade surplus and it would be hurting their economy at least in the short run. i, many others, think they should let their currencies strengthen, but fine do it gradually over a two, three-year period but last thing that the chinese support a sharp rise in the value of their currency and that's another reason why they are very unlikely to dump dollars. >> indeed. over time in the long run as you put it, fred, do you think that
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eventually the u.n. might be a viable alternative to the dollar considering we've got such growing clout of the chinese economy in global affairs, economically and financially. >> i think the world is in fact already moving gradually toward a multiple currency system. the dollar has been the dominant currency for over 100 years for a simple reason, we had no competition. there was no other country who had a currency based on an economy anywhere near as large. financial markets, not anywhere near as large. that's now changed with the creation of the euro and the euro's already gradually picking up market share from the dollar, about 5% over the last five, ten years. i think the euro will continue to increase its market share. over time the renminbi will probably become an international currency as soon as the chinese get rid of their capitol controls and move over to full convertibility. so i foresee a gradual evolution in the direction of a multiple currency world. i actually think that's a healthy thing. it means more competition, more
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healthy competitive pressure on the u.s. and other countries. i think we should be very relaxed about it. and in fact do what we can to support its evolution. again in a gradual and orderly manner. >> fred and alan, thank you very much for your conversation today. freezing temperatures across much of the nation sending oil prices to their highest level in 14 months. crude up $1.41 to close at $83 a barrel, that's of course, despite the oil invent or data which posted an unexpected increase of 1.3 million barrels last week. so when will the nation start thawing out with all of this weather weather channel alexandra is here with us. >> good afternoon. our second arctic blasts and in as many weeks it will be impactful. 60 of the country, 180 million people will be impacted by these cold temperatures. some more than normal. but places like florida will see
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the most widespread cold since the '80s. show you in reinforcing cold shot. you can see,today. temperatures there of course 10 to 20 degrees below average in the upper midwest. as we head toward thursday, this cold air bleeds south and eastward getting toward shreveport and dallas. kansas city 26 degrees below where we should be this time of year. very dramatic. then on friday as well. st. louis, 28 degrees below average. with all of this very cold arctic air we're also going to have moisture in place and we will see snow, some more than others. chicago tomorrow, a tough day. we're going to see anywhere maybe six to ten inches of snow. peoria, indianapolis, st. louis. coupled with the snow and very cold temperatures, we have the wind factor. travel, kc, st. louis, chicago, will be very dramatic, especially tomorrow. so if you are traveling, certainly keep that in mind. but cold air bleeding very far south, places like mississippi, alabama, georgia and florida. with that, we will see some snow
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in the south. pretty dramatic there. here in tupelo maybe an inch or so. atlanta, georgia, about an inch. knoxville to nashville, memphis one to three inches. the cold air well he is sconced 60% of the country, then comes the moisture. florida, not out of question for flurries for the weekend. >> sounds like it's going to be a cold one. thanks a lot for the update. we're going to take a look at all of the movie back in a moment. in these turbulent times,
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it's time for one last check on the markets. let's take a look with matt nesto for the move. it looks like another name is actually rallying in after hours. >> this is the construction contractor, shaw group. coming out with their fiscal first quarter results well ahead of estimates here. if you back out their westinghouse unit, it gets you to 57 cents a share, is it ahead of estimates. 45 was baked into the stock. sales essentially flat from a
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year ago at 1.9 billion. that's ahead of estimates at 1.7 billion. that's 7.5% move includes about a it.5% regular session gain. the company's backlog, talk about stimulus, plays up 50% at it 2 billion and expect to burn about 25% of that figure over the next 12 months. what's interesting, though, the stock like so many construction stocks got a big jump in november of '09 when president obama was elected and then tracking sideways. it's struggled to get above $30 a share. you can see there importantly it has busted through $30 and gotten to levels we haven't seen since october. so it's been flat-lined for quite a while now. >> showing a bit of life there. thanks a lot, matt nesto. to the nasdaq marketsite where melissa lee is standing by with a preview of what's coming up on "fast money." i know where you come from it is summertime but here in the united states it is winter and it is cold outside. that is affecting crops and also
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affecting metal production in other parts of the world. so we'll give you the best ways to play this arctic chill. also, a lot of hype in vegas about amazon and google but we'll give you the one tech stock name that's programs the surprise winner out of all of this. we've also gotten with all the hype about 3d tv in your home, the ceo of imax to join us about the prospects of what that will actually be in terms of consumer cost and also how he is feeling the impact of the success of "avatar." lots more ahead at the top of the hour. mandy. >> looking forward to it. find out what could move the markets tomorrow. you're watching cnbc, first in business worldwide. back in two. ers are always hungry for ideas. trading is all about strategy. and strategy... is all about information. heat mapping shows me where the money's moving. twenty five hundred stocks... one quick look. that's where the action is. plus, this amazing gadget... it's called the telephone. i can call td ameritrade anytime and talk trades, strategy... anything.
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